I'm not sure it's clear if the elves have to be close to the Palace or not- as in living in it or touching a piece of it- for the kinds of changes we've seen to start taking place... but the Palace, in it's activated state, hasn't been around that long. Rayek hurtled the souls of the Gliders into it, and essentially "woke it up". (Though one might wonder why all those generations of elves living and dying prior, and returning in spirit to the Palace didn't have the same effect- I'm assuming that Rayek's previous efforts and some conscious intent were needed.) Almost immediately after that, he stole it from the planet for 10,000 years. So during the Kings storyline, there was less Palace influence than there would ever have been before... It's only been around since the return- and that's about- what? thirty/forty years? Enough time for the Shards War, Ember's Wild Hunt storyline- and Korafaye and Shunapek to grow up.